3G Billionaire-Backed Light’s Stock Offering Raises $504 Million

Barbed wire sits on top of a fence at a Light SA electricity substation in Rio de Janeiro, Brazil, on Tuesday, Feb. 11, 2014. Brazil's electrical grid will be able to cope with hosting the soccer World Cup as temperatures and consumption diminish by the time the tournament begins, the government's deputy energy minister said last week after a blackout affected 6 million people.
Barbed wire sits on top of a fence at a Light SA electricity substation in Rio de Janeiro, Brazil, on Tuesday, Feb. 11, 2014. Brazil's electrical grid will be able to cope with hosting the soccer World Cup as temperatures and consumption diminish by the time the tournament begins, the government's deputy energy minister said last week after a blackout affected 6 million people.

(Bloomberg) -- An offering of Brazil’s power company Light SA late on Tuesday raised about 2.7 billion reais ($504 million).

The Rio de Janeiro-based firm, which counts billionaire and co-founder at 3G Capital Partners Ltd. Carlos Alberto Sicupira among its backers, sold 68.6 million worth of new shares, according to a filing. As part of the transaction, Light shareholder Cia Energetica de Minas Gerais, known as Cemig, sold its entire stake of 68.6 million shares in the company.

Light shares were priced at 20 reais each, or a 7.4% discount to Tuesday’s close, the companies said in the filings released early on Wednesday. Bloomberg News earlier reported on the pricing.

Key Insights

  • Cemig, a utility controlled by the Minas Gerais government, had a 22.6% stake in Light, which has lured investors including Sicupira, asset manager Atmos Capital and Ronaldo Cezar Coelho’s Samambaia fund.
    • In November, Sicupira said he indirectly held 30.6 million voting shares, accounting for about 10% of Light’s capital stock.
  • Light is going through a turnaround process and has said it will use the offering’s proceeds to cut debt and bolster its cash position.
    • In October, the company chose a new CEO, Raimundo Nonato de Castro, to replace Ana Marta Horta Veloso.
  • Light shares are down 11% in the past year, compared to a 6% decline for Cemig and a 2% advance for the benchmark Ibovespa index.

Digging Deeeper

  • Itau BBA was the lead underwriter, while BTG Pactual, Santander Brasil, XP and Citi also ran the transaction.
  • Cemig’s divestment is positive for Light as it eliminates any potential risk of interference on the firm’s management, while for Cemig it might be a push to the sale of non-core assets including Belo Monte and Santo Antonio, Safra analyst Daniel Travitzky wrote in a report dated Jan. 7.

Get More

  • Asset Manager Atmos Boosts Stake in Brazil Utility Light to 5.6%
  • Brazil’s Utility Light Extends Rally on CEO Change; Volume Jumps
  • Brazil’s Light Says Raimundo Nonato de Castro Elected CEO